Comment Text:
Dear Chairman and Commissioners,
My name is Mike Knab, and I'm a student from New York with a strong interest in markets and data. I'm writing to express my support for well-regulated prediction markets in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). As someone who actively trades on Kalshi, a CFTC-regulated exchange, Ive seen firsthand how these markets work and why they matter.
Over the past several months, Ive built and operated an automated trading system on Kalshi. My experience has been that the current regulatory framework functions well. The contracts are transparent, settlements follow clear rules, and the exchange operates with the kind of integrity I expect from a federally licensed venue. Prediction markets offer something unique compared to traditional financial markets: direct, binary exposure to real-world outcomes with defined risks. I believe restricting or overregulating these markets wouldnt protect retail participants like me. Instead, it would dismantle one of the few places where individual traders can compete on equal footing with institutional players.
I want to emphasize a few points. First, prediction markets arent gambling. Trading on Kalshi requires research and judgment about real-world events, much like trading stocks or commodities. Classifying event contracts as gaming, as discussed in Questions 15-22, overlooks their legitimate economic purpose, whether its price discovery or hedging against uncertainty. Second, these markets consistently produce forecasts more accurate than polls or pundits. As a student, I value how this data can inform public decision-making, a point raised in Questions 7-14 on public interest. Third, regulated platforms like Kalshi are far safer than unregulated offshore alternatives. Banning or over-restricting these markets, as hinted at in various questions, would push activity to less transparent venues, which helps no one.
I also believe the CFTC already has strong tools to address concerns like manipulation or insider trading, as noted in Questions 1-6 and 29-32. Informed trading, far from being a problem, actually improves price discovery and benefits everyone. Instead of broad bans, I urge targeted, proportionate regulation to address specific risks. The US should lead in financial innovation, not cede ground to other countries. If we overregulate, we risk losing both the economic benefits and the cutting-edge forecasting these markets provide for events like elections.
In closing, I ask the Commission to support a balanced regulatory approach for prediction markets. The current framework is working for participants like me. Lets build on that, not tear it down. Thank you for considering my input.
Sincerely,
Mike Knab
